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Home Sweet Home Insurance

You may be able to cut your premiums as much as 50 percent

Experts estimate that over a third of the some 60 million people who pay homeowner premiums could cut their home insurance bills significantly – in many cases by 50 percent or more. Yet many are unaware that they qualify for various discounts. Slimming down your bill needn’t be time-consuming. Nor does it require much expertise about the fine print in insurance policies. In fact, your research may amount to no more than a few well-placed telephone calls.

Insurance companies sell in different ways. Big companies, such as State Farm and Allstate, employ their own sales forces to sell their policies. “Agency writers,” such as Aetna, ITT Hartford, and Chubb, are represented by independent agents. The so called direct writers, such as American Express, Amica, and USAA, sell over the phone. As you might guess, they have the lowest selling costs and the best deals – if you qualify. Not everyone does. USAA limits its pool of potential customers to people who served in or have some connection to the armed forces. And Amica gets more of its new business from referrals from existing customers. American Express taps its cardholders – first for auto-insurance customers, then for home-owners insurance. Generally, it looks for card-holders in areas with a history of low loss ratios, such as Arizona, Connecticut, and Illinois.

Ask for discounts for home insurance. Photo by Elena

Allstate and State Farm can almost compete on price with the direct writers because they keep sales commissions low, usually no more than 8 percent. An agency writer, like Aetna, is more likely to pay 13 percent or even 20 percent. What keeps the agency writers in business is that the other insurers either won’t cover some applicants, or will do so only at much higher rates. Also, a good insurance agent can be a useful source of advice and counsel, a service many are willing to pay for.

No matter what firm you buy your insurance from, you can shave your annual premium by taking advantage of the discounts insurers offer. Your existing policy should list the discounts you already have, but that doesn’t mean they are the only ones for which you are eligible. For instance, you should inform your insurance company if you install or upgrade a home security system or if you have a live-in housekeeper; all of which may reduce your premium because they reduce the chance of a break-in. You also may qualify for a discount simply because you live in an area in which the company is trying to increase its market share. If you combine your homeowner’s policy with your auto-policy, you may get another break. And raising your deductable is always a sure way to lower your premium.

All discounts are not available from all insurance carriers in every state. And discounts vary from one company to another. Some are far more generous than others. But finding out exactly what you qualify for is easy enough. All you have to do is ask.